In Malaysia, for example, Participation banking is still growing approximately two times faster than conventional counterparts. In Indonesia, the Participation banking sector is currently growing at super-normal speed, while Turkey is aspiring to build a 15% market share by 2023.

Trade finance, mobile payment solutions and regulatory compliance are three factors that have a significant impact on the industry performance and would help narrow the performance gap that exists between Participation and traditional banks.

Digital banking is the future, with customers of Participation banks showing tremendous interest as they are increasingly active online. Banking is set to evolve towards technology-based, service-driven value propositions.

Banks should invest in analytics, to build rich insights into customers’ delights and pain points and personalize user experience. But customers do not just want their bank to have a digital presence; they want it be tailored to their lifestyle relationships and connections.

They also consider service excellence and capabilities to be the most differentiating factors. A different audience requires a different (and high-impact) brand and communication strategy.

Ashar Nazim, Global Islamic Finance Leader at EY, said: “Islamic banks in the UAE, also known as participation banks, are eyeing revenue growth through experience-led transformation of their domestic business. Stronger capital position is also driving their international expansion. Initiatives in mobile payments are likely to cause positive disruption to banks’ traditional operating models. Looking at the positive performance of Islamic banks in the UAE, the country is expected to be one of the main markets that drive the future internationalization of the Islamic banking industry.”

Shariah-compliant assets in the UAE crossed the $100 billion milestone for the first time. Islamic banking penetration in the UAE currently stands at 21.4 per cent and represents a 14.6 per cent share of the global market. The industry in the UAE is growing at more than twice the rate of conventional banking. Due to high demand, there is increased pressure on efficiency as more Islamic banks attempt to go mainstream.

In the study, EY monitored 55,884 Islamic banking customer sentiments in the UAE on social media as part of a wider study, which looked at 2.2 million customer sentiments dispersed across various online sources in nine key markets (Saudi Arabia, Bahrain, Kuwait, the UAE, Malaysia, Indonesia, Turkey, Qatar and Oman).

Banking clients were most satisfied with customer service, where positive comments on social media outnumbered negative comments by more than 5 per cent. Half of all the positive sentiments monitored were around customer service levels and complaint handling.

Customer feelings were mixed with respect to branch experience, online banking and phone banking. Out of the sentiments monitored on social media for all the three experiences, there was almost an equal number of positive and negative comments.

The study of social media comments has revealed an improvement opportunity for Shariah-compliant banks with respect to products and services, which were ranked the lowest in terms of customer satisfaction. Half of the overall negative sentiments monitored were about disappointing experiences with regard to product and service offerings.

“The call to action for Islamic banks in the UAE is to build rich insights into customers’ delight and pain points, and break operational silos. The time is right for analytics; banks need to challenge their channel capabilities and push for more customized products and services. Regulatory intervention on product design can help to both attract and protect consumers. The reputations of Islamic banks today will depend on the way banks engage with their customers,” Ashar added.